Correlation Between Ally Financial and TBC Bank
Can any of the company-specific risk be diversified away by investing in both Ally Financial and TBC Bank at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Ally Financial and TBC Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ally Financial and TBC Bank Group, you can compare the effects of market volatilities on Ally Financial and TBC Bank and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Ally Financial with a short position of TBC Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ally Financial and TBC Bank.
Diversification Opportunities for Ally Financial and TBC Bank
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ally and TBC is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Ally Financial and TBC Bank Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TBC Bank Group and Ally Financial is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Ally Financial are associated (or correlated) with TBC Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TBC Bank Group has no effect on the direction of Ally Financial i.e., Ally Financial and TBC Bank go up and down completely randomly.
Pair Corralation between Ally Financial and TBC Bank
Assuming the 90 days trading horizon Ally Financial is expected to generate 1.08 times less return on investment than TBC Bank. But when comparing it to its historical volatility, Ally Financial is 1.12 times less risky than TBC Bank. It trades about 0.04 of its potential returns per unit of risk. TBC Bank Group is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 299,963 in TBC Bank Group on November 1, 2024 and sell it today you would earn a total of 39,537 from holding TBC Bank Group or generate 13.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.7% |
| Values | Daily Returns |
Ally Financial vs. TBC Bank Group
Performance |
| Timeline |
| Ally Financial |
| TBC Bank Group |
Ally Financial and TBC Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ally Financial and TBC Bank
The main advantage of trading using opposite Ally Financial and TBC Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ally Financial position performs unexpectedly, TBC Bank can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in TBC Bank will offset losses from the drop in TBC Bank's long position.| Ally Financial vs. Naked Wines plc | Ally Financial vs. Trainline Plc | Ally Financial vs. Broadcom | Ally Financial vs. Kinnevik Investment AB |
| TBC Bank vs. LPKF Laser Electronics | TBC Bank vs. CleanTech Lithium plc | TBC Bank vs. Playtech Plc | TBC Bank vs. Axway Software SA |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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